No Cash, No Problem? Token-Backed Mortgages Could Redefine Risk in Subprime Lending

Better Home & Finance and Coinbase are starting a partnership that provides token-backed mortgages to American consumers.

These token-based mortgages would be originated and serviced by Better Home & Finance, a leading AI-native mortgage originator, and would receive the backing of Fannie Mae just like other conforming mortgages. 

Consumers qualify for a mortgage with Better Home & Finance. And in a separate loan, they pledge Bitcoin or USDC as collateral to fund their cash down payment. Coinbase, the largest cryptocurrency exchange in the U.S., will power these Bitcoin and USDC pledges. 

“Better was founded to make homeownership more accessible for all Americans, and this partnership with Coinbase introduces a new pathway to realizing the American Dream for the 52 million Americans who own digital assets,” said Vishal Garg, the Chief Executive Officer and Founder of Better Home & Finance.

“Together, we are taking a major step towards truly democratizing homeownership for hard working Americans.”

Using Digital Assets for a Down Payment

For decades, the path to a typical homeownership has meant Americans had to sell assets, liquidate investments, or withdraw retirement savings to cover a home’s cash down payment. These choices often triggered capital gains taxes or early withdrawal penalties. 

Token-backed mortgages offer a new option for consumers with digital assets. These consumers who don’t have enough cash for a down payment can secure a home loan by pledging their digital assets. The pledge acts as a substitute for a cash down payment. 

“Token-backed mortgages are a major first step to unlocking homeownership for the younger generations that have struggled with barriers to saving for a traditional down payment,” said Max Branzburg, Head of Consumer and Business Products at Coinbase.

There also is a rebate available. Any Coinbase One Member with a mortgage or token-backed mortgage through Better Home and Finance will be eligible for a rebate worth 1% of the mortgage value to cover closing costs and fees.

The rebate is capped at $10,000. For example, a Coinbase One Member with an $800,000 mortgage would receive a $8,000 rebate.

Statistics on Crypto Holders

According to Coinbase’s 2025 State of Crypto Report, 45% of Gen Z and millennials say they already own cryptocurrency. Only 18% of older investors say the same thing. 

National Cryptocurrency Association data shows that 67% of token holders are 45 or younger, and 26% earn less than $75,000 a year. Fifty-five percent of token holders hold less than $10,000 worth of cryptocurrency. 

According to Redfin, 12.7% of Gen Z and millennial homebuyers have sold digital assets to fund a down payment compared to 3.5% of Gen X and 0.5% of baby boomers. 

What this Means for Lenders

For lenders thinking about using Bitcoin or USDC for collateral in home loans, there is much to consider. It may open up a new segment of homebuying consumers who are active in cryptocurrency. Using a loan backed by cryptocurrency could improve approval rates and expand the pool of eligible borrowers.

But there is volatility and risk involved with cryptocurrency. What happens if a cryptocurrency crashes?

According to a press release from Better Home & Finance and Coinbase, market movements alone would never trigger liquidation and the collateral would only be at risk of liquidation if there is a 60-day payment delinquency on the part of the borrower.

But the volatility of cryptocurrency is still something lenders should consider if they decide to take on token-backed mortgages. How much risk are they comfortable with? What would they do if there is a big drop in value on a cryptocurrency?

The Bottom Line

Better Home & Finance and Coinbase are beginning a partnership that offers token-backed mortgages to American homebuyers.

Consumers who qualify for a mortgage with Better Home & Finance will now be able to pledge Bitcoin or USDC as collateral to fund their cash down payment. Coinbase will manage these Bitcoin and USDC pledges. 

Token-backed mortgages may appeal to younger investors, GenZ and millennials, who are already invested in cryptocurrency. According to a Coinbase report, 45% of Gen Z and millennials say they already own cryptocurrency, compared to just 18% of older investors.